Taipower eyes reducing coal procurement costs

POWER TO THE PEOPLE:Critics of price increases say Taipower’s losses are due to poor management and that the public should not have to pay for its inefficiency

Staff writer, with CNA

Taiwan Power Co (Taipower, 台電) will be expected to review and carry out new procurement policies to narrow mounting losses, an official said after the second meeting yesterday of a task force created to review the performance of the nation’s state-run oil and power companies.

Taipower would look to reduce its coal procurement costs and revise contracts with local independent power producers, Liu Ming-chung (劉明忠), executive director of the State-owned Enterprise Commission, told reporters after the closed-door meeting.

Liu said Taipower spends about NT$90 billion (US$3.08 billion) a year on coal and NT$140 billion a year to buy electricity from other sources, such as independent power producers, but Liu did not provide an estimate of the potential savings of the new plan once it takes effect.

The company also hopes to save NT$2.7 billion by lowering administrative costs and renting land that has sat idle, he said.

Taipower has come under attack since the government announced early last month that electricity prices would be raised substantially this month to help the state-run utility cover mounting losses.

The announcement sparked outrage, with critics contending that some of the company’s losses were due to poor management and bloated pay scales, and that consumers and the private sector should not have to pay for Taipower’s waste and inefficiency.

However, the second meeting of the task force did not cover issues related to the company’s manpower, compensation and benefits system, or electricity prices.

Due to time constraints, state-run oil company CPC Corp, Taiwan (CPC, 中油) was not discussed either, Liu said.

Following the backlash over the original plan to raise electricity prices, the government decided to phase in the higher rates, beginning next month, in three stages, instead of implementing them in a single go.

However, some lawmakers have asked that any price increase be pushed back until after the conclusion of the peak summer electricity consumption season, when rates are normally higher than during the rest of the year.

Minister of Economic Affairs Shih Yen-shiang (施顏祥) said before the meeting that the government is still planning to go through with both the peak season price rise and the phased-in price increase next month.

“It is a matter of principle and it should not be changed,” Shih said.

Under the government’s three-stage plan, the first and second-stage price increases will take effect on June 10 and Dec. 10 respectively, while the date for the third stage will only be determined after the government reviews how well the state-run power company has carried out reforms.

According to the plan, the electricity prices in the first two stages will rise a combined 9 percent, 21 percent and 27 percent, on average, for households, commercial and industrial users respectively.

Taipower is expected to lose NT$72.2 billion this year, which would push its accumulated losses to NT$190.1 billion, according to the ministry of economic affairs.